Insurers such as The Hartford and Horizon Casualty Services are embracing this approach. Horizon, a subsidiary of Horizon Healthcare Services Inc., is using software from RulesPower to replace some of its legacy applications. "Making changes to the existing applications is very complicated — change one thing here and many others have to change, too," says John Oliveira, director of operations. "With the rules engine approach, the same task is simpler and faster."

Another Layer of Dirt?
There are limits to this new software. For example, because it doesn't actually touch the legacy applications, screen-scraper technology doesn't provide true integration. Back-end integration might be desirable for a call-center operation: if an operator enters a change of address, you want to be sure that all relevant applications are updated. In addition, neither screen-scraper technology nor business rules/Web services technology helps a company significantly reduce its systems maintenance costs, since the old systems remain in place.

"You have to look at the business driver for extending your legacy systems," says Chris Jones, senior vice president of research at Aberdeen. "If there's data in your systems that you need, then you might just look at Web-enablement of legacy applications or user-interface improvements."

Furthermore, if new technology isn't added judiciously, it could complicate matters in the long run. "With new technologies, you have to be careful that you're not just adding another layer of dirt and creating a mess for the next person," says Mike Childress, a vice president at Electronic Data Systems.

ValueOptions, a managed behavioral health-care services provider based in Norfolk, Virginia, has addressed these challenges by consolidating legacy applications and then using Jacada's technology to update the remaining applications. Over six years, the company has consolidated seven different legacy systems to just one, and now uses Jacada Fusion to convert text-based screens of the remaining system into a simpler interface for customer-service representatives.

According to CFO Thomas Oram, he and the ValueOptions executive team considered the rip-and-replace alternative, but rejected it. "We thought there was too much risk in going to a completely new system," he says. "There are decades of data in our legacy system and customization that would be costly to replicate. It was more attractive to take the best of our legacy systems and add state-of-the-art technology on top." Still, the project hasn't been cheap: the company has spent approximately $20 million to consolidate its systems.

Don Durfee is research editor at CFO.

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